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  <h1>Introduction to Investing - How Do I Choose and Use a Broker?</h1>
  <p id="by">From <a href="http://financialplan.about.com/bio/Deborah-Fowles-6323.htm" rel="author">Deborah Fowles</a>, former About.com Guide</p>
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<h2>Basics for Beginners</h2>
<div id="aCtt">What's the difference  between a full-service broker (stockbroker) and a discount broker, and  how do you choose a broker? &quot;Full-service&quot; may sound like something you  should definitely have, but before you decide, make sure you know  exactly what that means, what it doesn't mean, and what it's going to  cost you.
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  <h3>Full-Service Brokers</h3>
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<p> Full-service brokers work for large brokerage houses like Citigroup,  Merrill Lynch, Smith Barney, and Morgan Stanley. All brokers will  execute trades for their clients, but a full-service broker will also  research various investments and give advice. </p>
<p>However, unless  you're very savvy about the ins and outs of investing, you won't know  whether you're getting good advice or advice that will take money from  your pocket and put it in the broker's. </p>
<p> Another issue in choosing a broker is that there's no guarantee that the  broker or &quot;Financial Consultant&quot; is any better than you are at choosing  investments. </p>
<p> Ideally, a full-service broker thoroughly researches various investments  and keeps you up-to-date with market trends, stock performance, and tax  laws, while providing you with investment ideas and recommendations. </p>
<p>You pay a healthy fee for these services, so brokers are most  suited for those who have a significant investment portfolio and don't  have the time or desire to manage their own investments. Even so, it's  important for you to have the final word on any investment changes.  Beware of wording to the contrary in your written agreement. </p>
<p> In return for these services, full-service brokers charge high fees when  you buy or sell stocks. For example, you could expect to pay as much as  $150 for an average trade with a full-service broker, where the same  service would cost between $5 and $30 online with a discount broker. </p>
<p>Full-service brokers also typically charge annual service charges  or maintenance fees on your account. Most disturbing, because most  full-service brokers receive commissions every time they execute a trade  for a client, their compensation is largely determined by how many  times they buy and sell stocks in your account. Those who are less  scrupulous may be buying and selling stocks in your account, not because  the decision is wise, but because the benefits to the broker are  greater. </p>
<p> This is not to say that you shouldn't use a broker, but if you do, go  into it with your eyes wide open, thoroughly check the broker out, and  never give anybody carte blanche to invest your money. </p>
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<h3>Discount Brokers</h3>
<p> Some of the best-known discount brokerages are E-Trade, Sharebuilder,  Fidelity, Charles Schwab, and TD Ameritrade. Discount brokers often make  more sense for the average investor because they're more affordable,  and if you want to make your own decisions, a discount broker may be the  way to go. </p>
<p> Before you sign up, make sure the broker deals in the type of investment  you plan to make (stocks, bonds, mutual funds, options, or whatever it  may be). Review the schedule of fees to find out what you'd be paying  for commissions, account maintenance, and other fees. Check out the list  of other services the brokerage offers. Some of them may be important  to you, such as the ability to write checks on your account, the ability  to make trades over the telephone, or the availability of research  information about different stocks, bonds, and mutual funds. </p>
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<h3>Opening a Brokerage Account</h3>
<p> Once you choose a brokerage, whether it's full-service or discount,  download the application forms from the brokerage's Web site, and send  in the completed forms with a check to fund your account. As soon as the  account is open, you can begin trading. </p>
<p> Brokerages may require a minimum balance of anywhere from $500 to  $2,000. If you're opening an IRA, they may waive the minimum  requirement. </p>
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